Netgear 2004 Annual Report Download - page 24

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Table of Contents
$19.5million primarily due to excess inventory levels brought about by the overall weak economic conditions in the networking markets
we serve. We were again profitable in 2002 and 2003, with net income of $8.1million and $13.1million, respectively, due to increased
revenue and improved gross margins. In 2004 we had net income of $23.5million and our net revenue increased 28% compared with
2003 and gross margin increased from 28.0% in 2003 to 32.1% in 2004. We believe our future results will be dependent upon the overall
economic conditions in the markets we serve, the competitive environment in which we operate, and our ability to successfully
implement our strategy, among other things. For additional information on factors that will affect our future performance, see “—Risk
Factors Affecting Future Results” beginning on page26.
Results of Operations
The following table sets forth the consolidated statements of operations and the percentage change from the preceding year for the
periods indicated:
Year Ended December31,
Percentage
Percentage
2002
Change
2003
Change
2004
Net revenue
$
237,331
26.1
%
$
299,302
28.0
%
$
383,139
Cost of revenue:
Cost of revenue
176,972
21.7
215,332
20.8
260,155
Amortization of deferred
stock-based compensation
144
(11.1
)
128
27.3
163
Total Cost of revenue
177,116
21.6
215,460
20.8
260,318
Gross profit
60,215
39.2
83,842
46.5
122,821
Operating expenses:
Research and development
7,359
11.7
8,220
20.6
9,916
Sales and marketing
32,622
50.1
48,963
25.6
61,514
General and administrative
8,103
10.8
8,977
61.7
14,514
Amortization of deferred
stock-based compensation:
Research and
development
306
48.4
454
(11.9
)
400
Sales and marketing
346
106.6
715
2.5
733
General and
administrative
867
(45.1
)
476
(17.9
)
391
Total
operating
expenses
49,603
36.7
67,805
29.0
87,468
Income from operations
10,612
51.1
16,037
120.4
35,353
Extinguishment of debt
—
—
(5,868
)
(100.0
)
—
Other income (expense), net
(1,140
)
*
(596
)
*
1,033
Income before income taxes
9,472
1.1
9,573
280.1
36,386
Provision (benefit) for income taxes
1,333
(364.4
)
(3,524
)
*
12,921
Net income
$
8,139
60.9
%
$
13,097
79.2
%
$
23,465
*
Percentage change not meaningful as prior year basis is a negative amount.
2005. EDGAR Online, Inc.